CHICAGO -- Holland, Mich. is gearing up for its largest borrowing ever, a $160 million bond sale to raise funds for a new natural gas power plant.
The city recently approved the sale of up to $195 million of 25-year electric utility system revenue bonds for the project, which carries a price tag of $185 million. Officials said they expect to issue around $160 million, according to local reports.
"This is historic," Mayor Kurt Dykstra was quoted as saying in the Holland Sentinel. "This is the single largest issuance of public bonds in the city's history."
The sale is tentatively set for March 18.
Proceeds will finance construction of a 114- megawatt natural gas fired turbine located in the city. Holland is located in western Michigan.
Moody's Investors Service rates the bonds Aa3, noting that the city has no other outstanding electric system debt. The rating reflects the utility's strong financial position and supportive bond covenants, including a 1.50 times rate covenant, Moody's said in a recent report.
Analysts also noted that the utility raised rates three times ahead of the borrowing to ensure strong coverage.
The Holland Board of Public Works is over 100 years old and serves a population of 100,000.
